Commerce Bancshares, Inc. 

Compliance Department, TB12-1 

922 Walnut St., P.O. Box 13686 

Kansas City, MO 64199-3686 

January 14, 2011 

 Office of Regulations and Interpretations 

 Employee Benefits Security Administration

 Attn: Definition of Fiduciary Proposed Rule, 

 Room N-5655

 U.S. Department of Labor

 200 Constitution Avenue, NW

 Washington, DC 20210

Delivered via email: 

e-ORI@dol.gov

RE: Definition of Fiduciary Proposed Rule – Request for Public Comment 

Dear Sir or Madam: 

Commerce Bancshares, Inc. (CBI) is a regional bank holding company with one bank subsidiary, 

Commerce Bank, N.A., and total assets of $18.8 billion at September 30, 2010. The bank is a full-service 

bank, with approximately 370 banking locations in Missouri, Illinois, Kansas, Oklahoma, and Colorado. 

The bank provides investment management and other fiduciary services to employee benefit plans 

governed by ERISA. In addition, the bank serves as trustee of a bank collective fund that invests in 

commercial mortgages, and in connection with the commercial mortgage underwriting process the bank 

obtains appraisals of the underlying real property collateral. It should be noted that the trust asset is the 

note and the underlying real property is not an asset of the trust but merely collateral support for the trust 

assets. 

We appreciate the opportunity to comment on the Definition of the Term "Fiduciary" proposed rule. 

Addition of appraisals or fairness opinions in general - Oppose 

Costs Outweigh Benefits

Paragraph (c)(1)(i)(A) of the proposed rule adds "appraisals or fairness opinions concerning the value of 

securities or other property" to the list of types of advisory relationships that may result in fiduciary status 

under ERISA. While we understand that the rule is intended to further protect the interests of plans, 

participants, and beneficiaries, application of the rule would have the opposite effect. 

As contemplated in your Regulatory Impact Analysis for the rule, additional costs to providers of 

appraisals or fairness opinions due to potential ERISA liability may compress the market for appraisal 

and valuation services. We believe that scenario is likely. More troubling, the most capable and 

reputable providers would be the first to leave because they likely enjoy excess demand from non-ERISA 

business. Plan fiduciaries charged with obtaining appraisals or valuations may be left with not only more 

expensive, but inferior valuation services to the detriment of plan participants and beneficiaries. 
Conflict of Laws

Also, with respect to valuations for private company Employee Stock Ownership Plans (“ESOPs”), 

assigning fiduciary status to providers of appraisals or fairness opinions may be incongruent with existing 

law. The Internal Revenue Code currently requires that the appraiser of a private company ESOP be 

independent. IRC § 401 (a) (28) (c). If fiduciary status is assigned to appraisers, the analysis of whether 

or not an appraiser is independent for I.R.C. § 401 purposes becomes increasingly complicated. 

We oppose the proposed addition of appraisals or fairness opinions to the list of advice that may result in 

fiduciary status. 

Limitation of the term "advice, or appraisal, or fairness opinion" - Request for clarification and expansion 

Under the proposed rule, the term "advice, or appraisal, or fairness opinion" does not include the 

provision of valuations used to comply with ERISA reporting and disclosure requirements, "unless such 

report involves assets for which there is not a recognized market and serves as a basis on which a plan 

may make distributions to plan participants and beneficiaries." Paragraph (c)(2)(iii). 

In the case of our collective investment fund investing primarily in notes secured by commercial real 

estate, an appraisal is not expressly required by regulation. We perform an appraisal on the underlying 

properties as a part of our underwriting process and to satisfy a best practice requested by our regulator. 

If appraisals become cost-prohibitive or unavailable due to potential ERISA liability for appraisers, the 

appraisals or the fund itself may need to be discontinued. 

We request clarification regarding whether the term "advice, or appraisal, or fairness opinion" includes 

valuation services involving property that secures assets of a plan. If the definition includes valuation 

services, we request an additional carve-out to exclude valuation services for property securing assets of a 

plan. 

Additionally, we ask that you consider expanding the proposed limitations to include valuations used to 

satisfy best practices and other requests from functional regulators. This is good public policy because it 

enables existing fiduciaries to readily comply with regulatory best practices. 

Conclusion 

Overall, we oppose the inclusion of appraisals and fairness opinions as part of the Fiduciary definition 

under ERISA. If appraisals and fairness opinions remain in the final definition, we ask for additional 

clarification and potential expansion of the proposed limitations. 

Thank you for giving us the opportunity to comment. 

Sincerely, 

Commerce Bancshares, Inc. 

Leslie K. Jones 

Trust Compliance Manager 

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